With debt getting out of hand, maybe it’s time we rethink how borrowing decisions are made at a national level, and by whom.
IT’S so easy to forget that public debt has caused considerable strife for Australia.
Rarely highlighted is the fact that two Australian government leaders were ousted from office because of borrowing practices: the first in 1932, when New South Wales premier Jack Lang had his commission withdrawn by governor Sir Phillip Game; and 43 years later when another Labor leader was similarly treated with the dismissal of prime minister Gough Whitlam by governor general John Kerr.
The Whitlam government’s problems arose from adopting an “Executive council minute, which gave minerals and energy minister Rex Connor, or anyone authorised by him, the power to issue a promissory note for $4,000 million on behalf of Australia.” (Lynched: The Life of Sir Phillip Lynch, Mastermind of the Ambush that ended Gough’s Run, by Brian Buckley, Page 6).
But the Whitlam ousting only temporarily dampened Labor’s attachment to big borrowing.
That’s evident when looking at a table Senator Barnaby Joyce displayed in the Senate showing government debt levels (defined as Commonwealth Government Securities, such as Treasury Bonds) since 1983, the year Bob Hawke-led Labor won government.
When Mr Hawke became PM, Australia’s government debt was $30 billion. He doubled this during his first three years.
However, from 1986 to 1991, the year Mr Hawke was ousted by his treasurer, Paul Keating, it was gradually cut back to $50 billion and stood at $55 billion at the leadership changeover.
But Mr Keating, who never ceases claiming he was a great treasurer, doubled it to $110 billion during his five years in the top job, which, thankfully, ended in 1996, to fall into John Howard’s lap.
One of the great achievements of the Howard years (1996-2007) was that he and treasurer, Peter Costello, doggedly trimmed it back to near the 1991 Hawke level of about $60 billion.
Then came the six disastrous and amateurish years of Kevin Rudd and Julia Gillard, aided and abetted by Treasurer Wayne Swan.
Labor began at $60 billion and will enter this September’s election campaign with debt at an unprecedented $270 billion, and heading for $300 billion.
Clearly an incoming Tony Abbott-led government will find itself in a far bigger debt bind than Messrs Howard and Costello did 17 years ago.
Thankfully, Joe Hockey is talking the language of restraint, which suggests we taxpayers are in for several tougher years because the time for sanity to have a fair go has arrived.
If he’s able to lighten the debt burden by slashing it to, say, the $110 billion mark after two terms he’ll deserve a medal of honour.
Ignore all the ballyhoo by so-called experts that big debt doesn’t matter and that this is ‘gross’ not ‘net’ debt.
There’s no excuse for imposing a massive debt burden upon future generations of Australians.
Furthermore, the spending and borrowing madness of the Rudd-Gillard years has meant our under-resourced armed services were starved of funds for equipment modernisation.
Labor’s record of obsessive borrowing suggests a radical overhaul of practices is needed by the time it next takes power.
What I’m suggesting is that it resolves to commission five economists and/or accountants whose appointments are ratified by a panel of Liberal-National Party MPs.
And those economists/accountants, not any Labor treasurer, should have the power to administer Australia’s debt level.
Federal Labor has shown since 1972 that it simply cannot administer debt when it has carte blanche control of Treasury.
That being so, for Australia’s long-term good Labor must voluntarily surrender its control over borrowing to a panel of experts confirmed by conservative oppositions.
We simply cannot permit another Labor government after the Abbott-Hockey years, whenever that may be, to continue from the Rudd-Gillard ways to double debt to say the $500 billion mark.
I see no reason why any Canberra administration should have sole or monopoly say over deciding national borrowing levels.
Parliament should decide this issue in open non-caucus binding votes.
Better still, borrowings should go to referendum, since it’s the people who are saddled with the repayments.
